Otelco Files for Chapter 11 Bankruptcy in Delaware Court

March 25 (Bloomberg) -- Otelco Inc., a local exchange
carrier based in Oneonta, Alabama, filed for bankruptcy
protection in Delaware, after losing a contract with Time Warner
Cable Inc. which resulted in lower revenue.

Otelco listed assets of $168 million and debt of $310
million in the Chapter 11 documents filed in Wilmington,
Delaware, yesterday.

“In addition to the loss of the TWC contract, recent
rulings by the FCC will also negatively impact the company’s
revenues,” Michael Weaver, Otelco’s chief executive officer,
said in the court filing, referring to the Federal
Communications Commission. “These two events will significantly
reduce the revenue and cash flow.”

Otelco won support of creditors for a debt restructuring
plan prior to the filing, the company said. Under the proposal,
which must be approved by the bankruptcy court, Otelco will cut
its long-term debt by half to $135 million from $271 million
with secured creditors swapping current debt for new debt and
shares in the company. Subordinated note holders will receive
92.5 percent of Class A shares in the company, Otelco said.

Otelco, formed in 1998, operates 11 local exchange carriers
in Alabama, Maine, Massachusetts, Missouri, Vermont and West
Virginia, also offering cable television and Internet services.
It is often the only wireline provider of phone services in the
rural areas, Weaver said.